A wellness program is any program designed to promote health or prevent disease. While increasingly popular among employers, wellness programs can violate HIPAA's health factor discrimination provisions unless they are carefully designed. Wellness programs can also run afoul of the ADA.
Wellness Programs Exempt from HIPAA
To be subject to HIPAA, a wellness program must provide a financial incentive or reward related to an health plan. If none of the conditions for obtaining a reward under a wellness program are based on an individual satisfying a standard that is related to a health factor (or if a wellness program does not provide a financial reward), the wellness program does not violate HIPAA. (However, such a program may still violate the ADA or state laws.)
- A program that reimburses all or part of the cost for memberships in a fitness center.
- A diagnostic testing program that provides a reward for participation and does not base any part of the reward on outcomes.
- A program that encourages preventive care through the waiver of the copayment or deductible requirement under a group health plan for the costs of, for example, prenatal care or well-baby visits.
- A program that reimburses employees for the costs of smoking cessation programs without regard to whether the employee quits smoking.
- A program that provides a reward to employees for attending a monthly health education seminar.
HIPAA Requirements for Wellness Programs Related to a Health Factor
- The reward for the wellness program, coupled with the reward for other wellness programs with respect to the plan that require satisfaction of a standard related to a health factor, must not exceed 20 percent of the cost of employee-only coverage (or family coverage, if applicable) under the plan.
- The program must be reasonably designed to promote health or prevent disease.
- The program must give individuals eligible for the program the opportunity to qualify for the reward under the program at least once per year.
- The reward under the program must be available to all similarly situated individuals.
A reward is not available to all similarly situated individuals for a period unless the program allows:
- A reasonable alternative standard (or waiver of the otherwise applicable standard) for obtaining the reward for any individual for whom, for that period, it is unreasonably difficult due to a medical condition to satisfy the otherwise applicable standard; and
- A reasonable alternative standard (or waiver of the otherwise applicable standard) for obtaining the reward for any individual for whom, for that period, it is medically inadvisable to attempt to satisfy the otherwise applicable standard.
A plan or issuer may seek verification, such as a statement from an individual's physician, that a health factor makes it unreasonably difficult or medically inadvisable for the individual to satisfy or attempt to satisfy the otherwise applicable standard.
The plan or issuer must disclose in all plan materials describing the terms of the program the availability of a reasonable alternative standard (or the possibility of waiver of the otherwise applicable standard). However, if plan materials merely mention that a program is available, without describing its terms, this disclosure is not required.
The following language, or substantially similar language, can be used to satisfy the above requirement: "If it is unreasonably difficult due to a medical condition for you to achieve the standards for the reward under this program, or if it is medically inadvisable for you to attempt to achieve the standards for the reward under this program, call us at (insert telephone number) and we will work with you to develop another way to qualify for the reward."
See FAB 2008-2 for two helpful DOL checklists to determine the compliance of a wellness program with HIPAA.